In Sweden, Geely will “pursue investment opportunities” (read: buy other companies in part or in whole), reports Gasgoo, citing sources from the Ministry of Commerce (MOFCOM). When MOFCOM gets involved, then we are talking sizeable deals. According to the report, Geely intends to cooperate with Swedish companies in several sectors, including green cars, alternative fuels, and hybrid technology. Stefan Ostling, an auto project manager from Invest Sweden, says that Geely has already completed tie-ups with Swedish auto technology consulting firms like Semcon and HiQ through equity participation and acquisitions.

In China, Geely plans to convert a nearly completed Geely plant in southwestern China into making Volvo cars, says the Wall Street Journal. Their plan to build a special Volvo plant, along with a separate engine factory in China, remains. However, that will take time, 2 years minimum. Repurposing an existing Geely plant will deliver capacity much faster. Geely is banking on the Chinese market to bring volume to Volvo, and for that, lower cost Chinese manufacture is mandatory.

According to the WSJ, Geely is interested in adding two or three bigger, more luxurious cars to the Volvo’s lineup. These cars are to compete with vehicles like the BMW 7-series.

13 Comments on “Geely Is In A Hurry With Volvo...”

Moving upscale is a good thing as it was the sale to Geely, which offers great opportunities for Volvo especially in China.
Volvo made its fortunes and became a strong brand in the ’70s when it was itself, standing for safety like no other brand at that time.It was not a competitor of neither BMW or Mercedes.
Today, building a vehicle like the 7-series or S-class makes perfect sense but just as long as it is a Volvo and complements the other vehicles in this segment and doesn’t try to be a copy of any of them.
The 7 and the S are both successful because they stand for something slightly different. Neither tries to be a copy of the other.

Actually, in modern times, Mercedes has been the leader in safety but has chosen not to deny its advances to lesser brands like Volvo.

Volvo has been the leader in marketing safety, since it really had no chance of competing with the Germans in driving dynamics etc..

I believe Mercedes actually had ads at one time that pointed out its peerless leadership in safety and its willingness to share for the benefit of all. I guess they just took as much Volvo crap as they could before it became unbearable.

There is more. The Chinese government holds a share of Geely/Volvo, which will certainly have some weight when it’s time to buy new wheels for party and government officials. Also, private customers may prefer a Chinese-owned company to other foreigners. Don’t underestimate good old chauvinism, er, patriotism – imagine where the American car industry would be without it.

Geely is technicaly a private company, but the funds used to buy Volvo came primarily from government sources:

“Similar questions — if anyone now cared — could apparently be asked of the Geely-Volvo deal. The financing details are still murky, but according to Chinese press reports, it appears that at least part of the $1.8 billion purchase price — perhaps as much as $500 million — will come from loans backed explicitly by municipal governments in China that will be home to some new Volvo production facilities. Another $1 billion will come from the state-owned Bank of China. It’s not clear what the interest rate on that loan is.”

Yes, it seems my statement that the government owns a share is false or at least premature; it is unclear whether the loans are to be paid back or will be converted to equity. However, in either case, the government certainly is invested in Geely and must be interested in its success. It would be highly surprising if government purchases were not part of the overall business plan.

I don’t know if this is possible, but if they could use Chinese manufacturing to save some money on production – but keep their quality like it is, they might actually have some success. Before, Ford had to keep their pricing inflated to BMW/Audi/Infiniti/Acura/etc levels to keep them aligned in the “brand structure”, and almost nobody but a Volvo diehard would buy a completely outmatched Volvo instead of one of those competitors at the same prices. Bring the prices down to Mazda/VW/Subaru/etc levels though – not cheap, but a good *value* for the money – and they would find more buyers I bet.